As socialization habits pre-COVID make a robust return, and the need for event cancelation insurance becomes more prominent, there are positives signs for insureds where it comes to rate and capacity.
“The rate for event cancelation insurance is dependent upon time of year and the weather associated,” said Leigh Rossi (pictured top left), senior vice present of NFP’s sports and entertainment group.
“However, upon plugging in all the required information into a spreadsheet for a proposed event in the same location a year apart, the rates were dropping slightly.”
This is a healthy sign compared to the state of the market at the height of the pandemic, which saw tight restrictions and astronomically high rates, said Marc Blumencranz (pictured top right), NFP’s managing director of its sports and entertainment group.
In the wake of the prolonged shutdowns due to the pandemic, organizers of large-scale sports and entertainment events have come to realize the benefits of having cancelation insurance.
“COVID has helped event cancelation coverage become top of mind,” Rossi said.
“People realized that if you don’t have cancelation insurance, those losses won’t be covered by traditional lines of coverage,” Blumencranz added.
When the world began to shut down in March of 2020, it caused a seismic shift in how swiftly a business or organization could see its entire livelihood come to a complete standstill.
“We hadn’t really expected an event of this magnitude,” Rossi said.
While communicable diseases were traditionally covered in most event cancelation products, the sheer pervasiveness of COVID caused many a headache for underwriters.
“Many assumed these types of illnesses were more regionally specific,” Blumencranz said. “Whether it was Zika in South America or Ebola in Africa, insurers were able prepare for potential claims and losses.”
As events were abruptly canceled due to governmental restrictions on large gatherings and travel bans were enacted to stop the spread of this globalized contagion, the insurance industry entered damage control.
“A restriction of capacity, coupled alongside underwriters who were suffering billions in losses, caused rates to skyrocket for those who were brave enough to organize an event during the height of the pandemic,” Rossi said.
This trend continued until 2022, when rescheduling and outright cancelation were still the norm.
However, as health restrictions eased and confidence in resuming social activities has risen, the marketplace has seen a positive reversal on pandemic-era struggles.
“We’re definitely seeing a healthy increase in capacity in the marketplace and a dip in rates,” Blumencranz said.
“There will be coverage for communicable disease again, but they’ll have some limitations on them,” Rossi added.
Having attended the National Association of Catastrophe Adjusters conference in April, Rossi noted how the impacts of climate change were a hot topic among key players.
“Weather catastrophes are being taken very seriously,” she said.
Traditionally, events such as hurricanes, wildfires, earthquakes, floods and other phenomena have been covered by event cancelation insurance.
However, the severity and cost of some weather and climate-related events has made some capacity providers think harder about what and where they cover.
Rossi pointed to how she had a difficult time procuring a rate for an event in Italy in autumn due to the recent flooding the country has experienced.
“While the event was far from the location where the flooding was the most problematic, the underwriter wasn’t willing to quote anything until they saw how that event was resolved and whether or not it would have an impact in the fall,” she said.